How Will UAW Strike Impact Chevy Malibu? Should GM Redirect ($$$) Shoppers To Impala?

[Perian]

Link: http://seekingalpha.com/article/7650...bu?source=feed

On May 5 the UAW struck GM’s Fairfax assembly plant in Kansas City, which makes the hot-selling Chevrolet Malibu sedan. The strike comes at a particularly inopportune time as a prolonged work stoppage could severely hurt the tremendous momentum Malibu has built up since its launch in October.

Since launching in Q4, Malibu demand has soared to new highs, surpassing all other models market-wide in January. While demand has declined over the past two months it has remained 3 times higher compared to its level last year and it continues to be one of the most shopped models market-wide.

In April, Malibu conversion, defined as the ratio of sales to demand, hit 22%, more than double that of its peak launch demand in January. Malibu conversion has not been this strong since its incentive-laden sell down in Q3 2007.

Maintaining launch momentum in the face of a strike is critical and requires informed decision making. A prolonged strike may further constrain inventory at a time when supplies need to fall in line with vehicle demand. On top of that, the new Malibu continues to attract significant interest from import shoppers who have increasingly put Malibu on their list of vehicles to shop. Even the slightest hiccup could jeopardize Malibu’s momentum and put to the brakes on what has been one of GM’s most successful launches.

What can GM do? The strike will test GM’s mettle and ability to keep the momentum rolling. Chevrolet must continue its marketing support of Malibu to ensure robust demand once the strike is settled and supplies return to more acceptable levels.

In the short term, Chevrolet can redirect some Malibu shoppers into Impala. The number of people shopping both models has increased to record highs in 2008. To keep these prospects from defecting to import rivals, Chevrolet should develop programs that incentivize dealers to redirect Malibu shoppers into Impala if the prospect is a defection risk. Better to keep them in the family than to lose them altogether.

Full article along with several interesting charts at link.

[Perian]

Originally Posted by Perian

Chevrolet should develop programs that incentivize dealers to redirect Malibu shoppers into Impala if the prospect is a defection risk.

Here in New York GM cut the incentive on the Impala by $1000 on 05/01.

Interesting to see the owner loyalty program ends on May 21st. I'll assume that means a big "10 Day" Memorial Day sales event will follow.

Here are some Malibu production figures:

Fairfax: April 2008: 13,191
Fairfax: MY08 (04/30): 85,184

Orion: April 2008: 8,933
Orion: MY08 (04/30): 30,874

Percentage of Malibu production down due to assembly disruption: 60% (Based on 04/08 figures).

[mdky2kss]

We lost that $1000 rebate on 05/06 and still struggling to keep the Impalas in stock. Cars all together are hot right now with gas hovering around $3.90 a gallon. We need more cars and will take any that we can get our hands on.

[GMC-70]

Redirect them to the Aura--I know it won't benefit the Chevy dealer, but at least it's in the family.

[member12]

Remove all incentives on the Malibu and try to put some money on the Impala to move them (unless they are willing to pay full price for a Malibu). I don't know where the Aura is built, but hopefully they can move them too.

I hope dealers have a good supply, and I hope that GM moves production of the Malibu to Mexico. We don't deserve the plant here if we go on strike this often during a slowdown in the economy....the entitlement attitude has hurt us pretty bad.

The dealerships that sell a lof of Malibus can send their lower level models to the slower dealers in exchange for the higher end models.....GM might as well get a high trasaction price for their cars while the supply demand curve pushes that.

GM also needs to make sure that dealeships have a good supply of Impalas and higher end Cobalts to pick up the slack. (Cobalt LTZ and Cobalt SS Sedan) It might be a good idea to divert G6 production at that other plant to Malibu almost 100% Malibu production to clear out G6 supplies. That would put GM in a position where they have some staying power over this strike.

If the UAW must go on strike, then they should do it at the Silverado/Suburban/Tahoe plant.

[2648562]

Just keep advertising like there's an endless supply. Then when customers come in dealers can sell them a like-new GEO Metro and order the Malibu.

[D C]

Originally Posted by GMC-70

Redirect them to the Aura--I know it won't benefit the Chevy dealer, but at least it's in the family.

Yup. Why redirect them to something that is much farther from what they're looking for? Pushing them into an impala is a good way to not sell them a car next time around.

[Dynamo]

Originally Posted by GMC-70

Redirect them to the Aura--I know it won't benefit the Chevy dealer, but at least it's in the family.

They make all Aura's at FFX. At least they have stock.

Orion should be able to increase production of Malibus.

[paul38469]

Now that Orion is not dependent on Fairfax for stamping of some parts, you can bet they are going to ramp up Malibu production and lower G6 production as much as possible to minimize the impact the best they can.

Besides, I am sure the strike will be done sooner than later.

[tgagneguam]

Hmmm, so conversion, the ratio of sales to demand, fell from a peak in September to its present levels well before the strike. While the conversion rate drop is explained as resulting from supply problems from the now striking plant, it sounds like the supply has long since not matched demand. We all knew that, except, perhaps, GM. Why is GM taking almost one year to more closely match the two? People will claim this is good, but I am also eager for any domestic product to torpedo the Asian tripartite. Of course, the strike-we all know why the UAW chose the Fairfax plant to take issue with their contract-hasn't helped the issue, but once it's presumably resolved, it sounds like Fairfax (and Orion) need to better balance the manufacture of their products to meet rather impressive demand for the Malibu. It's gonna be hard to maintain that demand if product remains in short supply (i.e., plenty of people are going to just walk on over to their local Toyota, Nissan or Honda dealership and buy a well-stocked, equally competent Camry, Altima or Accord).

[jcgable]

Originally Posted by 2648562

Just keep advertising like there's an endless supply. Then when customers come in dealers can sell them a like-new GEO Metro and order the Malibu.

So I'm gonna buy a new car, which one's me? A cool convertible or an SUV?
Too bad I didn't know that UAW was whack and now I'm drivin off the lot in a used subcompact...

[Ambalanche]

I'd like to see Orion produce nothing but Malibu's until the strike at Fairfax is over. That would blunt the overall impact. This is just like the UAW to try and screw up GM's most important launch in years!

The logic is beyond me! Let's strike to keep the company that employs us from making any money on cars now that the trucks arn't selling. We'll get a few perks now since we won't have a company to employ us in a few years after it shuts down completely.

[Mikkoo]

Originally Posted by paul38469

Now that Orion is not dependent on Fairfax for stamping of some parts, you can bet they are going to ramp up Malibu production and lower G6 production as much as possible to minimize the impact the best they can.

Besides, I am sure the strike will be done sooner than later.

I agree with you. This would be the logical thing to do. The G6 can't be anywhere as
popular as the " All new" Malibu. Lower the G6 production levels as much as possible.

[377Z]

Originally Posted by jcgable

So I'm gonna buy a new car, which one's me? A cool convertible or an SUV?
Too bad I didn't know that UAW was whack and now I'm drivin off the lot in a used subcompact...

I HATE those commercials!!! I find that dang tune playing a constant loop in my head some days, its aweful.

...-F-R-E-E- that spells free... DA MN-IT!!! thanks alot...

[dlr]

The problem with this scenario is that there aren't enough Impalas out there right now. I'm trying to find a basic LT Impala and it's not out there. If it is the dealer won't give it up, even for a Malibu.